Independent fuel retailer attributes success to ethanol blends

Vollan Oil Co., Baltic, SD, has offered ethanol blends for six years, It buys ethanol direct, blends it, and trades Renewable Identification Numbers (RINs). The Vollans then pass most of the RIN value on to consumers. Even with passing on most of the value of the RINs, the independent fuel retailer is making better margins than it ever did before (including the time it was selling fuel under a major brand).

From the first day that Jim and Bruce Vollan, owners of Midway Vollan Oil Company, Baltic, SD, installed blender pumps six years ago, E30 and E85 began “flying out the door,” Bruce Vollan told attendees at this week’s American Coalition for Ethanol (ACE) Conference in Des Moines, IA.

And soon after the EPA approved E15 for sale in June 2012 (for vehicle models 2001 and newer), the South Dakota fuel station, located just north of Sioux Falls, began offering that as well. “It was an overnight success. We give customers a choice. That’s what it takes,” Vollan said. Offering E15 for a little over a year now, the Vollans report that it has become the second best seller after super unleaded (E10) gasoline.

The Vollans are independent or “unbranded” fuel retailers. In addition to the retail station, they own a bulk fuel delivery business. They sell unleaded gasoline, diesel and biodiesel blends as well as ethanol blends.

Being independent has given the father and son team the freedom to offer a variety of ethanol blends--E10, E15, E30 and E85. They buy ethanol direct, blend it, and trade the Renewable Identification Numbers (RINs) currently valued at $.75 per RIN (like commodities and petroleum prices, RIN values fluctuate). The Vollans then pass most of the RIN value on to consumers. Recently, their E85 fuel was priced at $2.29 per gallon, compared to $3.69 per gallon for regular unleaded.

Even with passing on most of the value of the RINs, the South Dakota retailer is making better margins than it ever did before (including the time before 2004 when it was selling fuel under a major brand). Vollan said that he does not understand why more independent retailers are not offering ethanol blends and staying abreast of how RIN values can impact their bottom lines.

But, retailers do need to monitor RIN prices, keep pace with compliance reporting and have the ability to blend fuel to have a reasonable amount of RINs to trade, Vollan said. There is also the expense and down time to initially install blender pumps.

But, offering blends well satisfied Vollan’s core group of customers (most of whom are corn growers, and own stock in area ethanol plants). Vollan also figures that about 75 percent of his family company’s business is new customers since introducing the blender pumps—again he attributes it to giving customers choices. Midway Vollan oil is currently selling about 600 gallons of ethanol per day.

“If you know of any unbranded retailers, encourage them to look into this,” Vollan told the ACE attendees.

Bruce Vollan, Midway Vollan Oil Co. (left) received the Paul Dana Marketing Vision Award from Ron Lamberty, senior vice president, American Coalition for Ethanol, at the ACE Conference this week. Vollan was recognized for giving consumers a choice when it comes to fuelling their vehicles and for dispelling the blend wall myth